The legend lives on: Nokia-branded Android smartphones are coming

Here’s some news we didn’t expect, certainly not in the early morning of Google I/O day: Nokia is getting back into the mobile game.

Nokia-branded Android smartphones and tablets will arrive to market, following strategic agreements involving Microsoft, Nokia Technologies, Foxconn, and a company called HMD global. Yeah, it’s complicated.

Here’s a breakdown:

Finnish private venture HMD global is taking over a part of Microsoft’s feature phones business, as well as the rights to sell Nokia-branded devices.

Microsoft will sell the rest of the feature phone business (the manufacturing side) to FIH, a subsidiary of Taiwanese giant Foxconn, for $350 million.

Nokia Technologies (Nokia’s technology and licensing business) will license its brand and some of its telecom patents to HMD global.

HMD global will have exclusive rights to manufacture and sell Nokia-branded feature phones, smartphones, and tablets.

Nokia Technologies will have a say in the development of Nokia-branded products. These products will have to pass “mandatory brand requirements and performance provisions.” Nokia will also have a seat on HMD’s board.

HMD global will be headed by former Nokia executive Arto Nummela, currently a VP at Microsoft.

Okay, so what does this all mean for consumers? It means that Nokia Android phones and tablets are coming soon. They will be developed by HMD global, with input from Nokia Technologies, and manufactured by Foxconn. After almost a decade, the dream of a real Android Nokia phone is about to be realized.

Will these devices be faithful to Nokia’s spirit and history? We can only hope so, but the good news is this isn’t a mere licensing play. Unlike brands like Alcatel or Philips, the Nokia name will not be slapped on devices that have almost nothing to do with the original. At least on paper, Nokia Technologies will be involved in the creation of new devices that will have to “exemplify consumer expectations of Nokia devices, including quality, design and consumer focused innovation.”

HMD global is based in Helsinki and staffed by Nokia veterans from the company’s heyday. Nokia Technologies does not have a holding equity in the venture, which is owed by Smart Connect LP, a private equity fund managed by Jean-Francois Baril, a former Nokia executive.

If things go well, HMD global could emerge as the spiritual successor of Nokia of old, while Nokia Technologies continues to invest in developing innovative products like its 360 camera. Meanwhile, Microsoft is turning the page on the disaster that acquiring Nokia’s mobile business turned out to be.

Espoo, Finland – Nokia has announced plans that will see the Nokia brand return to the mobile phone and tablet markets on a global basis. Under a strategic agreement covering branding rights and intellectual property licensing, Nokia Technologies will grant HMD global Oy (HMD), a newly founded company based in Finland, an exclusive global license[1] to create Nokia-branded mobile phones and tablets for the next ten years. Under the agreement, Nokia Technologies will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights.

HMD has been founded to provide a focused, independent home for a full range of Nokia-branded feature phones, smartphones and tablets. To complete its portfolio of Nokia branding rights, HMD announced today that it has conditionally agreed to acquire from Microsoft the rights to use the Nokia brand on feature phones, and certain related design rights. The Microsoft transaction is expected to close in H2 2016. Together these agreements would make HMD the sole global licensee for all types of Nokia-branded mobile phones and tablets.HMD intends to invest over USD 500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business.

Nokia-branded feature phones remain one of the most popular choices of mobile phone in many markets around the world today, and HMD will continue to market them as part of an integrated portfolio alongside a new range of smartphones and tablets. HMD’s new smartphone and tablet portfolio will be based on Android, uniting one of the world’s iconic mobile brands with the leading mobile operating system and app development community.

As also announced today by FIH Mobile Limited (FIH), a subsidiary of Hon Hai Precision Industries (trading as Foxconn Technology Group), the remainder of Microsoft’s feature phone business assets, including manufacturing, sales and distribution, would be acquired by FIH. HMD and Nokia Technologies have signed an agreement with FIH to establish a collaboration framework to support the building of a global business for Nokia-branded mobile phones and tablets. This agreement will give HMD full operational control of sales, marketing and distribution of Nokia-branded mobile phones and tablets, with exclusive access to the pre-eminent global sales and distribution network to be acquired from Microsoft by FIH, access to FIH’s world-leading device manufacturing, supply chain and engineering capabilities, and to its growing suite of proprietary mobile technologies and components.

Nokia will provide HMD with branding rights and cellular standard essential patent licensesin return for royalty payments, but will not be making a financial investment or holding equity in HMD. Nokia Technologies will take a seat on the Board of Directors of HMD and set mandatory brand requirements and performance related provisions to ensure that all Nokia-branded products exemplify consumer expectations of Nokia devices, including quality, design and consumer focused innovation.

HMD would be led, once the Microsoft transaction closes, by Arto Nummela as CEO, who previously held senior positions at Nokia and is currently the head of Microsoft’s Mobile Devices business for Greater Asia, Middle East and Africa, as well as Microsoft’s global Feature Phones business. HMD’s president on closing would be Florian Seiche, who is currently Senior Vice President for Europe Sales and Marketing at Microsoft Mobile, and previously held key roles at Nokia, HTC and other global brands.

Ramzi Haidamus, president of Nokia Technologies, said:“Today marks the beginning of an exciting new chapter for the Nokia brand in an industry where Nokia remains a truly iconic name. Instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce mobile phones and tablets that can leverage and grow the value of the Nokia brand in global markets. Working with HMD and FIH will let us participate in one of the largest consumer electronics markets in the world while staying true to our licensing business model.”

Arto Nummela, CEO-designate of HMD, said:“We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers. Branding has become a critical differentiator in mobile phones, which is why our business model is centered on the unique asset of the Nokia brand and our extensive experience in sales and marketing. We will work with world class providers in manufacturing and distribution to move quickly and deliver what customers want.”

Vincent Tong, Chairman of FIH, added: “We are looking forward to fostering a strong and long-term collaboration with HMD global and Nokia. We are impressed by the experience and expertise of the HMD management team and are committed to supporting them with our manufacturing, technology and supply chain capabilities, to capture market opportunities together in the future.”

1 Excluding Japan

About Nokia TechnologiesNokia Technologies (TECH) is Nokia’s advanced technology and licensing business. Formed in 2014, TECH builds upon Nokia’s solid foundation of industry-leading licensing and technology R&D capabilities. By focusing on Digital Health, Digital Media, Brand Licensing, and Patent Licensing, TECH is expanding the human possibilities of the ever-evolving world of technology. In 2015, Nokia Technologies launched OZO, the world’s first virtual reality (VR) camera designed for professionals.

About Nokia Nokia is a global leader in the technologies that connect people and things. Powered by the innovation of Bell Labs and Nokia Technologies, the company is at the forefront of creating and licensing the technologies that are increasingly at the heart of our connected lives.

With state-of-the-art software, hardware and services for any type of network, Nokia is uniquely positioned to help communication service providers, governments, and large enterprises deliver on the promise of 5G, the Cloud and the Internet of Things. http://nokia.com

About HMD globalRegistered and headquartered in Helsinki, Finland, HMD is a new private venture founded to create a new generation of Nokia-branded mobile devices. HMD is run by a group of experienced industry leaders, including CEO Arto Nummela, previously of Nokia and currently the head of Microsoft’s Mobile Devices business for Greater Asia, Middle East and Africa as well as Microsoft’s global Feature Phones business, and President Florian Seiche, who is currently Senior Vice President for Europe Sales and Marketing at Microsoft Mobile, and previously held key roles at Nokia, HTC and other global brands.www.hmdglobal.com